Gold Lower In Wake Of Upbeat U.S. Jobs Report And On Profit Taking

(Kitco News) - Gold futures prices are solidly lower in early U.S. trading Thursday. The market extended early losses after the U.S. employment report for June came in at up 288,000, which beat most market expectations. Heavy profit taking from recent gains is also featured heading into the U.S. holiday weekend. August Comex gold was last down $18.50 at $1,312.50 an ounce. Spot gold was last quoted down $13.40 at $1,314.25. December Comex silver last traded down $0.339 at $21.025 an ounce.

The key U.S. Labor Department employment situation report for June showed non-farm payrolls increased by a higher-than-expected 288,000. The important jobs number was expected to come in at up 215,000. However, Wednesday’s hotter-than-expected reading from the ADP national employment report (up 281,000) made many suspect the Labor Department’s non-farm jobs number would come in stronger-than-forecast.

The U.S. jobs report gives the Federal Reserve more information in its quest to determine the best monetary policy. There is presently debate among market watchers on whether the Fed should begin to ratchet up interest rates. However, recent comments from Fed officials, including Fed Chair Janet Yellen on Wednesdsay, suggest most still favor keeping U.S. interest rates very low for some time to come. Thursday’s upbeat U.S. jobs data does fall into the favor of the monetary policy hawks, however.

Also, the European Central Bank held its monthly monetary policy meeting Thursday. No monetary policy moves occurred and none were expected after last month’s fresh easing measures, ECB president Draghi’s remarks at his press conference will be closely scrutinized for clues on future moves from the ECB.

Many U.S. markets close early Thursday, in observance of the U.S. Independence Day holiday that gives the U.S. a three-day weekend. U.S. markets are closed on Friday. With the long U.S. holiday weekend ahead, during which time unexpected geopolitical developments have extra time to surface, I suspect many traders will take some risk off the table today.

Other U.S. economic data due for release Thursday includes weekly jobless claims, the Challenger job cuts report, and the U.S. trade deficit report. The ISM non-manufacturing report, and the global services PMI.

Wyckoff’s Daily Risk Rating: 6.0 (It’s a U.S. three-day holiday weekend, so that extra day makes more time for unexpected weekend developments.)

(Wyckoff’s Daily Risk Rating is your way to quickly gauge investor risk appetite in the world market place each day. Each day I assess the “risk-on” or “risk-off” trader mentality in the market place with a numerical reading of 1 to 10, with 1 being least risk-averse (most risk-on) and 10 being the most risk-averse (risk-off), and 5 being neutral.

The London A.M. gold fix is $1,326.75 versus the previous P.M. fixing of $1,326.50.

Technically, August gold futures bulls still have the overall near-term technical advantage as prices are in a four-week-old uptrend on the daily chart—but now just barely. Bulls need to show fresh power soon to keep their technical advantage. The gold bulls’ next upside near-term price breakout objective is to produce a close above solid technical resistance at $1,350.00. Bears' next near-term downside breakout price objective is closing prices below solid technical support at $1,300.00. First resistance is seen at $1,325.00 and then at the overnight high of $1,329.00. First support is seen at Thursday’s low of $1,309.40 and then at this week’s low of $1,305.00.

December silver futures bulls still have the near-term technical advantage but are also seeing some profit-taking Thursday. Prices are still in a four-week-old uptrend on the daily bar chart but the bulls also need to show fresh power soon. Silver bulls’ next upside price breakout objective is closing prices above solid technical resistance at the March high of $21.825 an ounce. The next downside price breakout objective for the bears is closing prices below solid technical support at $20.00. First resistance is seen at the overnight high of $21.265 and then at this week’s high of $21.385. Next support is seen at this week’s low of $20.87 and then at $20.70.